NSW’s Pet Reform: Turning Investment Properties into Zoos?

The NSW Government has just delivered another blow to property investors, and this time it's not about rental caps or land tax—it’s about pets.

Yes, pets.

But not just one or two.

Under new tenancy reforms, landlords must now allow up to four animals in their rental properties… and, in some cases, potentially even more.

This isn’t satire.

It’s the latest in a string of poorly thought-through policies dressed up as tenant protections, but which, in reality, risk pushing our fragile rental market into deeper crisis.

And once again, the investor—the person providing the roof over someone’s head—is painted as the villain and told to "just deal with it".

Let’s unpack what’s happening here, why it matters, and what the likely fallout will be.

What the new rule actually says

Under the new regulations announced on 4 April 2025, landlords in NSW:

• Can no longer refuse a tenant’s request to keep a pet, unless they have approval from the NSW Civil and Administrative Tribunal (NCAT), and…

• Must permit tenants to keep up to four animals—whether they’re dogs, cats, rabbits, or other pets—unless they can prove it’s unreasonable.

• And that key word—“reasonable”—is where it gets legally fuzzy.

For example, if a landlord objects to pets based on property type, strata rules, or insurance clauses, those may be overridden if deemed “unreasonable”.

But who determines that?

NCAT.

A tribunal member, not a housing or legal expert.

One person’s subjective opinion will now set a precedent for what’s acceptable in your investment property.

The guidelines also require landlords to provide a "suitable environment for pets", meaning modifications to make the property more animal-friendly—think pet doors, fencing, and flooring adjustments.

All on the investor’s dime.

Let’s talk practicalities

Here’s the real-world impact for investors:

• Increased wear and tear – Four animals in a home is not a small matter. Scratches on floors, pet odours, chewing damage, and backyard destruction aren’t theoretical—they’re real maintenance issues, often expensive to rectify.

• Neighbour complaints – Properties with multiple pets increase noise, potential aggression issues, and even the risk of allergies or phobias in neighbouring tenants or residents.

• Insurance concerns – Many landlord insurance policies don’t cover damage caused by pets—or if they do, they impose stricter premium costs or exclusions.

• Dispute risk – The term “reasonable” now becomes a legal battleground. If you object to four pets, you'll likely have to plead your case before NCAT. And we all know how time-consuming, stressful, and unpredictable that process can be.

• Exit strategies – For landlords who might want to sell their property or repurpose it, pet damage or entrenched pet tenancies may reduce appeal or limit options for renovation.

This is not about being anti-pet.

Many landlords already allow pets, on a negotiated, case-by-case basis.

The key difference now is control—investors no longer have it.

And the consequences? Predictable and Dangerous

What happens when investors are stripped of rights, while their responsibilities and costs increase?

They exit.

We’re already seeing it.

Investors have been pulling out of the market since whispers of this reform began.

This new regulation just accelerates the trend.

In fact, Tim McKibbin, CEO of the Real Estate Institute of NSW, warns this will lead to a “mass exodus” of landlords from the rental market.

And we don’t need a crystal ball to know what that means: fewer rental properties, even tighter vacancy rates, and rents pushed even higher.

The irony is bitter.

In an attempt to improve tenant conditions, the government has created a policy that will likely worsen the rental crisis for everyone, especially the very renters they claim to be helping.

Government overreach or political performance?

Let’s not kid ourselves.

This reform isn’t about solving the housing crisis.

It’s about short-term political gain.

It panders to tenant advocacy groups and builds populist sentiment among pet lovers.

It’s a feel-good headline: “Tenants Can Now Have Pets!”

But beneath the surface, it’s another demonstration that private investors are being sidelined from housing policy decisions.

And that’s a mistake.

Investors provide over 90% of Australia’s rental housing.

You cannot fix the rental market by punishing them.

Yet that’s exactly what’s happening.

As McKibbin put it:

“The Government has assumed responsibility for housing tenants by driving investors out… but where are the homes going to come from?”

Good question.

A better way forward

Nobody is saying tenants shouldn’t be able to own pets.

But as with most things in life, balance is key.

A more sustainable and fair approach could include:

• Optional pet bonds to cover potential damage

• Clearer definitions of what constitutes ‘reasonable grounds’ for pet refusal

• Support for investors making pet-related modifications, possibly via tax offsets or subsidies

• Greater clarity in insurance coverage, with government and insurers working together to reduce risk

The real solution lies in collaboration, not coercion.

Investors, tenants, government—each is a stakeholder.

Yet too often, landlords are treated as a faceless obstacle rather than part of the answer.

The bottom line

The NSW Government’s pet reform might play well in the polls, but it’s a disaster for investor confidence.

And it couldn’t have come at a worse time.

With construction delays, record migration, and spiralling living costs, we need more rental stock, not less.

But instead of encouraging more supply, the message to investors is loud and clear: “You’re not welcome here.”

And when landlords walk away, tenants are the ones who’ll pay the price.

If this trend continues, we’re not just talking about a pet problem.

We’re talking about a policy problem that could push the state’s rental market to breaking point.

About Leanne Jopson Leanne is National Director of Property Management at Metropole and a Property Professional in every sense of the word. With 20 years' experience in real estate, Leanne brings a wealth of knowledge and experience to maximise returns and minimise stress for their clients.